Taiwan Communiqué No. 75, April 1997

The China-connection

... Kissinger, Haig and Co.: profitable links to China

During the past few weeks, considerable evidence also surfaced in Washington that a number of former and present US government officials are benefiting greatly from dealing with China.

The first major source was the newly published book "The coming conflict with China" by former bureau chiefs Richard Bernstein and Ross Munro. In an extensive exposé in chapter 4, titled "The New China Lobby", they describe how Messrs. Kissinger, Eagleburger, Scowcroft, Cyrus Vance, Alexander Haig and other former high-level officials influence US policy towards China often at the expense of a democratic Taiwan and get paid large amounts of money to "advice" corporate clients interested in doing business in China. On page 16 of this Taiwan Communiqué we will further discuss this new book.

Another extensive exposé was published in the Washington Times on 25 March 1997. It was titled "Famous names well paid to support China" and again mentioned Messrs. Kissinger and Haig as key figures in the lobbying campaign to seek expanded U.S.-China relations.

The article stated: "Both former Cabinet secretaries have received lucrative fees as deal-makers for business-clients with ventures in China, and both have a large financial stake in expanding U.S.-China trade relations..."

However, according to the article, the two are not registered with the Justice Department as foreign agents, and the multi-million dollar business campaign to retain China's MFN-status and gain its entry into the WTO "...strains the limits of the lobbying disclosure law and possibly violates the Foreign Agents Registration Act."

The article mentions the $26 billion American International Group, Boeing, Motorola, General Motors, General Electric and IBM as major organizers and backers of the multi-million-dollar lobbying campaign by the newly-formed "Coalition for U.S.-Trade."

The article also mentions that Mr. Haig is "honorary senior adviser" to China's government-controlled maritime operation, COSCO, the shipping corporation which, in a shady deal (see article below), was intended to take over the closed U.S. naval facilities in Long Beach, California.

The article mentions that six major corporate backers also simultaneously launched a separate US$ 750,000-a-year public relations campaign to boost China's image through the Internet, schools and community organizations. The campaign is being set up by Washington-based Edelman Public Relations Worldwide.

Finally, the Washington Times article lists a number of large campaign donations by law firms hired to represent Beijing and Chinese companies to the campaigns of key people in the U.S. Congress.

Feinstein and Bennett Johnston:

China's voices in Congress

Voicing support for China and benefiting from business deals with China is not limited to big business and former government officials. It also occurs in the US Congress: two persons stand out in this respect: former Senator J. Bennett Johnston (LA) and present California Senator Dianne Feinstein.

Mr. Johnston stood out in 1995 as the only senator voting against the resolution to allow Taiwan President Lee Teng-hui to enter the US to attend a reunion at his alma mater, Cornell University.

It now becomes clear why: in the book "The coming conflict with China" writers Bernstein and Munro report that Mr. Johnston's two sons have extensive business deals with China. One, Hunter Johnston, is a consultant for Entergy Corp. as well as General Atomics, which wants to export nuclear power plant equipment to China. When the Louisiana Democrat, who was chairman of the Senate Energy Committee, went to China for a visit, he took his two sons with him, so they could conduct business deals.

Mr. Johnston also wrote to his colleagues on the Senate Foreign Relations Committee and asked them to muffle their support for Chinese-occupied Tibet. He offered his colleagues to arrange meetings with the Chinese ambassador in DC. Congressional staffers often referred to Johnston as the "appointment secretary" for the ambassador.

Another outspoken China-propagandist in the Senate is Dianne Feinstein. To her colleagues and Senate staffers she is known for her long, haranguing monologues, explaining her close ties with Jiang Zemin dating from the days she was mayor of San Francisco and the rosy perspective for U.S.-China relations, and a strong support for China's MFN-status. In doing this, she totally whitewashes China's repression in Tibet and the lack of human rights in China itself, as well as China's military threats and missiles campaigns against a free and democratic Taiwan.

Mrs. Feinstein's political positioning is also linked to financial benefits and profits from China trade: her husband is San Francisco investment banker Richard C. Blum, who in 1994 set up a US$ 150 million fund, named Newbridge Capital, to invest in companies in China. According to a 24 June 1994 article in the San Francisco Business Times , Mr. Blum was recruiting Chinese-Americans in San Francisco to form operational teams to watch over the funds' investments in China.

The article noted that besides Mr. Blum own (existing) investments in China which are reported by the San Francisco Chronicle to run between US$ 2 and 3 million , "...he has long-established contacts dating back to trade missions he took with his wife, then-Mayor Dianne Feinstein, in the late 1970s.

At the end of March 1997, several California newspapers published articles on the conflict of interest between Mrs. Feinstein's outspoken positions on relations with China and her husband's business dealings. On 28 March 1997, the Los Angeles Times published an article titled "Feinstein, husband hold strong China connections," while on 1 April 1997, the San Francisco Chronicle published an article, titled "Blum factor is a real one for Feinstein."

In the article, San Francisco Chronicle writer Debra Saunders wrote about Mr. Blum's attempt to whitewash the conflict of interest by saying that his donations to the American Himalayan Foundation "...remove any perception that I, in any way ... benefit from or influence my wife's position as a U.S. Senator."

Ms. Saunders rightly stated: "Sorry, it doesn't work that way. It would be amazingly naïve to believe that being the husband of the U.S. Senator most friendly to China has no effect on Blum's business dealing in China."

The Long Beach Naval Station caper

On 8 March 1997, Associated Press / Dow Jones News Service reported in an investigative article that the historic Naval Base at Long Beach, California was about to be leased to the Chinese government-controlled shipping company COSCO (China Ocean Shipping Co.) for ten years at US$ 14.5 million a year.

The deal is amazing, because the city of Long Beach is going to pay some $200 million to prepare the base, and also contribute $ 200,000 for the Chinese shipping company's moving costs. According to the article, the base is valued by the City at $65 million, but preservationist groups estimate its value at some $ 300 million.

The article detailed how Mr. Clinton's White House in 1995 and 1996 pushed to turn the Navy Base over to the Chinese firm. One of the key figures in the deal was Johnny Chung, a shady Chinese-American businessman, who last year gave $366,000 to the Democratic National Committee. The money was later returned on suspicion it illegally came from foreign sources. Last year, Chung brought six Chinese officials to the White House to watch Clinton make his weekly radio address. One of the six was an advisor to Cosco.

The AP / Dow Jones report details how COSCO was involved in a number of shady activities, including the scheme to smuggle some 2,000 AK-47 rifles into the United States, with the purpose of selling them to streetgangs in Los Angeles and San Francisco (see our Taiwan Communiqué no. 71, June 1996, pp. 18-19).

In 1993, a COSCO ship was stopped by U.S. Navy ships in the Persian Gulf after U.S. intelligence warned it might be carrying chemical weapons materials.

During the past year, COSCO ship were repeatedly detained for violating international safety regulations, and the US Coast Guard has put the company on a target list of shippers to monitor. It was also a COSCO ship which hit a crowded boardwalk in New Orleans in December 1996, injuring 116 people.

The New York Times ( "Senators ask for inquiry on leasing of California base to Chinese" , 13 March 1997) quoted U.S. federal officials as saying that COSCO ships are frequently the subject of surveillance, not only because of the weapons incident last year, but also because of concerns that China is evading export quotas on textiles and that its ships have been used to bring "all kinds of contraband" into the US.

According to the Wall Street Journal ( "Blum Associate's link to China hinders plan to convert base" , WSJ, 26 March 1997) Mr. Peter Kwok, a director of Dianne Feinstein husband's Newbridge Capital investment company (see above), is an advisor to COSCO's Hong Kong operation.

On 20 March 1997, several members of Congress, led by California Congressmen Hunter, Cunningham and Bono introduced legislation in the US House of Representatives prohibiting the transfer of the Long Beach Naval Station to foreign-owned shipping companies.